Join our community of smart investors

Brewin Dolphin gives thanks for discretionary fees

The wealth manager gained new business despite rockier equity markets during the first-half
May 16, 2018

Like some of its peers, Brewin Dolphin (BRW) saw its investment returns suffer from more tumultuous investment markets at the start of this year. That resulted in negative market movements amounting to £1.3bn during the first half, offsetting £0.9bn in net inflows. Funds under management were down 1 per cent on the end of March to £39.7bn, but recovered to around £41bn a month later.

IC TIP: Buy at 386.8p

Nevertheless, revenue came in ahead of market expectations thanks to growth in fees – and a reduction in commission – as a proportion of overall income, afforded by a continued shift to discretionary wealth management. Discretionary net inflows were £1.3bn, including internal transfers, taking the total up 2 per cent to £34.3bn. Meanwhile, advisory funds continued to decline, down 43 per cent year on year.

Within the group's direct discretionary service – which carries a higher revenue margin – almost a fifth of clients are opting for the wealth management service, which combines financial planning and investment management services. The indirect bespoke portfolio service benefited from rising demand for advice around pensions freedoms, with the average new case size increasing by 22 per cent.

Analysts at Peel Hunt expect adjusted pre-tax profit of £79.4m during the 12 months to September 2018, giving EPS of 22.1p (from £70m and 19.6p in 2017).

BREWIN DOLPHIN (BRW)   
ORD PRICE:386.8pMARKET VALUE:£1.1bn
TOUCH:386.4-387p12-MONTH HIGH:399pLOW: 320p
DIVIDEND YIELD:3.9%PE RATIO:21
NET ASSET VALUE:89p*NET CASH:£142m
Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201714728.48.24.25
201816134.19.74.4
% change+10+20+18+4
Ex-div:24 May   
Payment:15 Jun   
*Includes intangible assets of £90m, or 32p a share